Henry Schein 2003 Annual Report Download - page 23

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Results of Operations
2003 Compared to 2002
Net Sales
Net sales for 2003 and 2002 were as follows (in thousands):
% of % of
2003 Total 2002 Total
Healthcare distribution (1):
Dental (2) $1,364,812 40.7% $1,227,273 43.4%
Medical (3) 1,338,084 39.9% 1,093,956 38.7%
International (4) 576,628 17.2% 437,046 15.5%
Total healthcare distribution 3,279,524 97.8% 2,758,275 97.6%
Technology (5) 74,281 2.2% 66,726 2.4%
Total $3,353,805 100.0% $2,825,001 100.0%
(1) Consists of consumable products, small equipment, laboratory products, large dental equipment, branded and generic
pharmaceuticals, surgical products, diagnostic tests, infection control products and vitamins.
(2) Consists of products sold in the United States and Canada.
(3) Consists of products sold in the United States’ Medical and Veterinary markets.
(4) Consists of products sold in the Dental, Medical and Veterinary markets, primarily in Europe.
(5) Consists of practice management software and other value-added products and services, which are sold primarily to healthcare
professionals in the United States and Canada.
For the year ended December 27, 2003, our net sales increased $528.8 million or 18.7% from the comparable prior year period. Of the
increase in total net sales, $521.2 million or 98.6% resulted from an 18.9% increase in our healthcare distribution business. Of this
increase, $137.5 million resulted from an 11.2% increase in our dental business, $244.1 million resulted from a 22.3% increase in our
medical business and $139.6 million resulted from a 31.9% increase in our international business. The remaining increase in net sales of
$7.6 million resulted from an 11.3% increase in our technology business.
The $137.5 million or 11.2% increase in dental net sales, consisted of an increase in dental consumable merchandise of $91.0 million or
9.4% and dental equipment of $46.5 million or 18.3%. The increase in dental net sales was primarily due to increased account penetration
of existing customers driven by our Privileges loyalty program and an acquisition. Excluding the effects of the acquisition and exchange
rates, net sales for the dental business increased $96.3 million or 7.9%. The $244.1 million or 22.3% increase in medical net sales was
primarily due to increased sales to physicians’ office and alternate care markets. The $139.6 million or 31.9% increase in international net
sales was primarily due to an acquisition, favorable exchange rates and increased account penetration in France, Spain and Austria,
partially offset by a divestiture. Excluding the effect of exchange rates, the acquisition and divestiture, net sales for the international market
increased $31.6 million or 7.2%.
The increase in technology net sales of $7.6 million or 11.3% was primarily due to increased sales of value-added products including
software products and related services, including the impact of our MarketOne marketing initiative. Under this initiative, certain technology
and equipment products were sold directly to end-user customers beginning with the third quarter of 2002, rather than through resellers,
which resulted in a higher growth rate for the technology business. Without this change, the technology business net sales would have
increased by 8.0%.
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